Mexico cancels oil auctions under new president

Date created : 12/12/2018 - 02:57

Mexican President Andres Manuel Lopez Obrador, an anti-establishment leftist and energy nationalist, has criticized the opening of the oil sector to private and foreign companies as a corruption-riddled "farse"AFP

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Mexico City (AFP)

Mexico's energy regulator said Tuesday it was canceling its remaining oil block auctions for private firms, the centerpiece of the country's landmark energy reform, now under attack by new President Andres Manuel Lopez Obrador.

The National Hydrocarbons Commission (CNH) said it was scrapping the two pending auctions because the energy ministry had asked it to withdraw the 46 blocks up for grabs so it could "review energy policy and evaluate the results and progress" made under the 2013 reform.

"Since the totality of the areas under consideration in each auction have been excluded... we have approved the cancellation of the auctions in question," it said in a statement.

The CNH had already suspended the auctions after Lopez Obrador won a landslide election victory in July.

Former president Enrique Pena Nieto launched the ambitious energy reform in a bid to breathe new life into Mexico's oil sector, where production had plummeted under 76 years of monopoly by state firm Pemex.

But Lopez Obrador, an anti-establishment leftist and energy nationalist, has criticized the opening of the sector to private and foreign companies as a corruption-riddled "farse."

The blocks up for auction in what would have been the 10th and 11th tenders of the third round of the process are located in the oil-rich far north and south of the Gulf of Mexico.

Since the energy reforms were launched, Mexico has awarded more than 100 contracts to firms including Exxon-Mobil, Shell, Total and BP, for total potential investment that the previous government calculated at $150 billion.

Lopez Obrador said earlier that companies should show they are following through on their promised investments within three years or have their oil blocks taken away.

"As they say in sports, the ball's in their court. If there's investment and they produce, then go ahead. If they're just sitting on the contracts to speculate, we can't allow that," he told a press conference.

The CNH also announced a six-month postponement to a separate tender to seek partners for Pemex projects that had been scheduled for early next year.

Lopez Obrador said Sunday he was increasing Pemex's budget by $3.7 billion for 2019 in a bid to boost production.